India's Modi in Nepal to deepen energy, trade ties

KATHMANDU -- India Prime Minister Narendra Modi on Sunday sought to secure energy deals with Nepal at the start of a visit aimed at boosting New Delhi's influence in a neighborhood increasingly wooed by Beijing.

In an address to Nepal's parliament, Modi announced $1 billion as a concessional line of credit to the impoverished nation as he attempted to strengthen economic and diplomatic ties between the two neighbors.

"Nepal can free India of its darkness with its electricity," said Modi, whose government has pledged to end the country's frequent blackouts.

"But we don't want free electricity, we want to buy it. Just by selling electricity to India, Nepal can find a place in the developed countries of the world," he said.

Modi told lawmakers that India and Nepal have relations as "old as the Himalayas and the Ganga," after he arrived in Kathmandu for the first bilateral visit by an Indian prime minister in 17 years.

The right-wing nationalist has sought to shore up support with India's neighbours since sweeping to power at national elections in May, in a bid to check China's sway in the region.

Modi held talks with Nepal Prime Minister Sushil Koirala during which he pushed to revive stalled power projects including developing hydropower plants using Nepal's abundant water resources and Indian investment.

Earlier proposals to develop joint ventures between the two countries have faced delays due to disagreements over perceived threats to Nepalese sovereignty, allowing rival China to step into the breach.

Energy-hungry India

Nepal Finance Minister Ram Sharan Mahat said the two leaders agreed to fast-forward a long-stalled plan to develop a 900-megawatt project on Nepal's Karnali river to provide power to both energy-starved countries.

The joint venture signed between Kathmandu and Indian infrastructure giant GMR in 2008 would be approved and signed within 45 days, Mahat told reporters.

During the bilateral talks, Modi also offered US$1 billion worth of concessional loans to help develop Nepal's infrastructure, Mahat said.